Equitas is to pay a $43m (£23m) settlement to reimburse the State of California for the clean-up of a hazardous waste site.
The dispute over the cleanup costs of Stringfellow Hazardous Waste Site began in 1993. Between 1965 and 1972, 35 million gallons of toxic waste was dumped on the land.
California said it had purchased "numerous" policies from the defendants to cover potential liability associated with Stringfellow.
Along with 34 other insurers, Equitas refused to pay for the dump to be cleaned.
In 1993 the state sued Equitas and four other insurers to force them to honour policies. A further 20 insurers were added to the suit in 2001.
The $43m settlement was reached out of court last week.
California attorney general Bill Lockyer said: "We have spent more than 30 years and hundreds of millions of dollars to clean up the site."
The settlement with Equitas is expected to pave the way for more settlements with other insurers, said Lockyer.
